Getting a ride to the mall is no longer a necessary step in buying a fun new toy. Tech-savvy kids of today can easily order this season’s it-gadget from the comfort of their own bedroom via online shopping. Whether it’s a new Frozen DVD or a smartphone game app, spending a few dollars is easier than it’s ever been. So how do you teach your kids healthy money management tips in this world of instant gratification? Money Management International suggests several ways parents can incorporate financial lessons into their children’s lives.
1. Teach while you shop. Money Management International suggests teaching children early on how to shop for the best value. Incorporate your child in your pre-shopping list-making routine, which teaches them organization, planning, and budgeting, and how these things lead to savings.
Tip Have your kids help you compare prices or snip out coupons so they’ll understand how to make wise spending decisions.
2. Help them create their own banking accounts. Both checking and savings accounts can be opened for children at many banks. Having an account in their own name can teach responsibility, financial planning, and important money management skills they’ll use for decades to come. Teach them about the dangers of overspending, borrowing too much, and saving up for what they really want.
3. Spark their entrepreneurial spirit. If you have a crafty kid, spark their entrepreneurial spirit by encouraging them to sell their handmade bracelets or paintings to friends and family members. This helps teach financial skills and boosts confidence, while strengthening math skills and teaching how to set and achieve goals.
4. Start an allowance plan. Allowance plans are not one-size-fits-all. Customize an allowance plan for your child based on age and responsibilities. Having an allowance can form a great basis when it comes to working hard, saving up, and spending. Check out our article on how to choose an allowance plan on the next page.
Setting an Allowance Plan
Teaching kids that money doesn’t grow on trees can be a tricky task. Most experts agree that the best way to build money management skills, and the responsibility that comes along with them, is to start kids out on an allowance plan. But how do you choose one that’s right for you? Use these tips as a guideline.
Start an allowance when they’re ready. There’s really no set age that children should begin an allowance plan, and it differs from child to child. Whether they’re 3 or 9, the best time to start giving children an allowance is when they begin showing an interest in money and buying things.
Decide on the basics. Questions about how the money will be earned or how it can be spent are sure to come up, so consider your child’s level of responsibility and what they’re likely to need and want before you start. Then, be sure to clearly explain the plan to your child.
Teach them how to spend, save, and share. It’s easy for kids to think that money is all about spending. Helping them understand the concepts of not only spending, but also saving and sharing, will open their eyes to all the ways money can be used.
Keep the plan consistent. The consistency of an allowance plan will help build trust and teaches kids how to plan for a payday. Try to pay each week at the same time, and keep the amount the same.
Be up-front about what the allowance should cover. Whether their money should be used to purchase necessities like a new backpack, or fun things like a new baseball glove, set the guidelines.
Discuss favorite local charities, fundraisers, or church donation options with your child and let them choose how they’d like to share their allowance with others.